Mark Price

Wal-Mart Looks to Reverse Same-Store Slide

August 18, 2010

FROM RETAILWIRE:
The good news for Wal-Mart and its investors is the world's largest retailer posted a higher-than-expected profit in the latest quarter. The bad news is that same-store sales fell for the fifth consecutive quarter. What is your assessment of Wal-Mart's performance in the past year or so and what do you expect from the retailer going forward?      [more...]

The revenue decline from Wal-Mart begs a key question -- "Which customers declined their spending?" Was it the loyal WM customer who shops weekly or was it the more infrequent customer who shops for specific items or specific price rollbacks? The answer to this question is key to diagnosing and addressing the issues.

If the decline is not in the core, then the issue is not so dramatic. Traditional customer acquisition efforts can drive in non-core customers, some of whom will become loyal. If the issue is declines among core customers, then the issue is much more serious. Core customers decline their spending due to competition, lack of appropriate items or reduced overall spending in the tough economy. It is possible that the reduction of SKUs has eliminated choice for those best customers, and they have taken some of their purchases elsewhere. Not only must WM address the issue in that case, but they must also do a good job of communicating the increased variety so that lost customers will know to come back. This is an approach to just one of the issues.

One thing I am wondering is about the impact of WM's grocery expansion on the business. Does the movement to purchase grocery at W-M affect total market basket? This could also be one of the issues driving the decreased revenue situation.

Either way, the revenue report will be a "shot in the arm" to Wal-Mart -- not a bad thing.